Reminder: 2018 ‘Pay or Play’ Affordability Percentage is 9.56%

Health Care Reform Updates

Percentage Down from 2017

Under the employer shared responsibility (“pay or play”) provisions of the Affordable Care Act, applicable large employers—generally those who had 50 or more full-time employees (including full-time equivalent employees) in 2017—may be subject to a penalty if they do not offer affordable coverage that provides minimum value to their full-time employees (and their dependents) in 2018. As a reminder, for plan years beginning in 2018, coverage will generally be considered affordable if the employee’s required contribution for the lowest cost self-only health plan is 9.56% or less of his or her household income for the taxable year. For plan years beginning in 2017, the applicable percentage was 9.69%.

Given that employers are unlikely to know an employee’s household income; they may use a number of safe harbors to determine affordability, including reliance on Form W-2 wages. Click here for more information on these safe harbors.